Fazzari v Henley Partners Pty Ltd

[2009] NSWSC 387

CITATION:	Fazzari v Henley Partners Pty Ltd [2009] NSWSC 387
HEARING DATE(S):	11/05/09
JUDGMENT DATE :	11 May 2009
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
EX TEMPORE JUDGMENT DATE:	11 May 2009
DECISION:	Order transferring proceedings to Family Court
CATCHWORDS:	CORPORATIONS - winding up application on the just and equitable ground - husband and wife are only members - no suggestion that creditors' interests in jeopardy - proceedings on foot in Family Court with respect to property and otherwise - whether proceedings should be transferred to Family Court
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss 1337C, 1337H, 1337L Family Court Rules, Chapter 25
CATEGORY:	Principal judgment
CASES CITED:	Roff v Aqua Distributors Pty Ltd (1996) 22 ACSR 248 Zhu v Tech Universal (HK-Macau) Development Pty Ltd [2005] FCA 256; (2005) 53 ACSR 704
PARTIES:	Robert Joseph Fazzari - Plaintiff Henley Partners Pty Limited - First Defendant Jennifer Lee Fazzari - Second Defendant
FILE NUMBER(S):	SC 1887/09
COUNSEL:	Mr A Combe - Plaintiff Mr J T Svehla - Second Defendant
SOLICITORS:	Matthews Folbigg Pty Limited - Plaintiff RBHM Commercial Lawyers - Second Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

MONDAY 11 MAY 2009

1887/2009 ROBERT JOSEPH FAZZARI v HENLEY PARTNERS PTY LIMITED & ANOR

JUDGMENT

1 These proceedings were commenced by originating process filed by the plaintiff on 12 March 2009. The plaintiff’s principal claim is for an order for the winding up of the first defendant company, Henley Partners Pty Limited, on the just and equitable ground. There was filed at the same time an interlocutory process by which the plaintiff sought the appointment of a provisional liquidator.

2 It is significant that the just and equitable ground alone is relied on and that there is no allegation that the company is insolvent.

3 The company is owned by Mr Fazzari and Mrs Fazzari, the plaintiff and the second defendant. They are both accountants. The company is the vehicle by which the accountancy practice has been carried on. The company apparently acts as the trustee of a family trust in conducting the practice.

4 I have heard this afternoon an application by Mrs Fazzari for an order that these proceedings be transferred to the Family Court of Australia. That application is made under s 1337H of the Corporations Act 2001 (Cth), it being noted that, in terms of s 1337C, the Family Court has jurisdiction with respect to civil matters arising under the Corporations legislation. The application for a winding up order on the just and equitable ground and the interlocutory application for the appointment of a provisional liquidator both fall within that description.

5 The question posed by s 1337H upon an application of this present kind is whether it appears to this court that, having regard to the interest of justice, it is more appropriate for the proceedings to be determined by the Family Court. If that question is answered in the affirmative, this court is empowered to make a transfer to the Family Court but is not compelled to do so.

6 Section 1337L identifies certain matters to which the court must have regard in determining an application under s 1337H. Each of them is concerned with locality and matters of geography. They are really concerned with cases where the transfer sought is from one State or territory to another or involves some appreciable distance. In the present case, Mr Fazzari and Mrs Fazzari are already parties to proceedings in the Family Court at Parramatta and matters of geography and concomitant convenience or inconvenience do not enter into the equation. I therefore need not say more about s 1337L.

7 The Family Court proceedings to which I have referred were commenced by Mr Fazzari in October 2008. It has been clear from the beginning of the Family Court proceedings that the company, Henley Partners Pty Limited, is owned by the parties to the marriage and, significantly, that there will have to be an accounting with respect to the affairs of the individuals as they relate to the company. Applications with respect to property are already pending in the Family Court.

8 Mr Combe’s cross-examination of Mrs Fazzari this afternoon has served to underline the reality that the financial circumstances of the company and the financial circumstances of the two individuals are closely connected, indeed intertwined and, perhaps, somewhat confused together, with the likelihood that there may be some misapprehensions about who owns what. Indeed, the evidence suggests that for some years moneys of the company derived from the carrying on of the accountancy practice have sometimes been deposited into bank accounts other than accounts of the company itself.

9 Several factors indicate to my mind that it is desirable that all aspects of the natural persons’ property disputes be centralised in one court. Although the issues in the existing Family Court proceedings are not identical with the issues in the winding up proceedings (including the application for the appointment of a provisional liquidator), there will inevitably be a substantial overlap so far as fact-finding goes. There is also the point that the husband and wife are the only shareholders in the company.

10 It will, in my estimation, be more efficient, less time-consuming and less costly for the issues arising in the winding up and regarding any threat to company assets to be resolved in the court which determines the matrimonial disputes. The risk of inconsistent findings will be removed if the proceedings are heard and determined in one court. The factors I have just mentioned were referred to by Gyles J in Zhu v Tech Universal (HK-Macau) Development Pty Ltd [2005] FCA 256; (2005) 53 ACSR 704 in his reasons for his decision to transfer winding up proceedings to the Family Court. Gyles J adopted those factors, with due acknowledgment, from the earlier judgement of Merkel J in Roff v Aqua Distributors Pty Ltd (1996) 22 ACSR 248.

11 A further factor was put by Merkel J and repeated by Gyles J in these terms

“The Family Court, with its wide powers under the Family Law Act 1975 (Cth) in respect of property settlements, is well-equipped to resolve the ultimate dispute between the parties being the future conduct, ownership and control of the company; the resolution of that issue will be a critical element in determining matters arising under the Corporations Law .”

12 To my mind precisely the same consideration is relevant here. The company's activities are confined to a two-person accounting practice and the two persons are already parties to the Family Law Act proceedings in the Family Court. It is significant that there is no suggestion of insolvency and that this largely removes from consideration matters going to the protection of creditors’ interests. That was a factor that weighed in favour of transfer to the Family Court in the two cases to which I have referred.

13 The Family Court is equipped to handle Corporations Act cases. Mr Svehla has drawn my attention to Chapter 25 of the Family Court Rules which makes specific provision in that respect.

14 The Family Court, with its ability to exercise broad supervision over the parties to the marriage who are also the only shareholders in the company and the active participants in the accounting practice, may well have a greater degree of flexibility to deal in a less blunt way with the securing of temporary measures to protect company property than this court has.

15 The pending applications in the Family Court to which I have been taken appear to me to lay the ground for that. The nature of those applications on my assessment of them is such that the application for the appointment of a provisional liquidator will dovetail neatly with the relief that is sought.

16 For all these reasons, I am of the opinion that, having regard to the interests of justice in this case, it is more appropriate for the whole of these proceedings to be determined by the Family Court.

17 I have heard speculation about the speed with which the Family Court might or might not approach what is considered by the plaintiff to be the urgent need for the appointment of a provisional liquidator. All I can say to that is that any court shown a need for urgency will, in the proper exercise of its jurisdiction, make appropriate arrangements to take the matter in hand expeditiously. I have no basis whatsoever for an inference that the Family Court would be slow or inefficient. I make no such finding.

18 I order pursuant to s 1337H of the Corporations Act 2001 (Cth) that the whole of these proceedings be transferred to the Family Court of Australia.

[Submissions on costs]

19 I have heard submissions on costs. There is no reason why costs of the interlocutory process seeking the transfer to the Family Court should not follow the event.

20 I therefore order that the plaintiff pay the defendant's costs of that interlocutory process.

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